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Posts Tagged ‘Theft’

The first three posts in this series covered fraud and theft of products entering the establishment, food theft, and alcohol theft.  Now, we’re going to look at outright theft of sales receipts.  While it’s unlikely that your servers are grabbing handfuls of dollars on their way out the door, today’s post looks at several more sophisticated methods of achieving the same result.

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“What I like to drink most is wine that belongs to others.”
Diogenes.

Today’s post looks at alcohol related thefts once the alcohol has made its way to the coolers and shelves in the bar.  These types of alcohol theft are broad categories.  Within each there are many scams, too many to list.  As I have discussed many times on this blog and my tax blog, alcohol theft has dire tax consequences for a restaurant.  In Canada, the total cost of the theft can easily be twice the cost of the stolen alcohol.  That’s why it is so important to minimize theft in your operation.

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Part I in this series focused on fraud and theft up to the point your inventory becomes available for sale.  As we found out, lots can go wrong during the purchasing, receiving and inventory safeguarding processes.  These frauds and thefts involved uncooked food or unpoured alcohol.  Now, let’s uncork a bottle and turn up the heat.

Today, I want to discuss some of the major thefts that happen during “normal” operations.  These thefts involve cooked food or poured alcohol.  These are the ones that take place “right under your nose”.  Today’s post examines food theft.

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Today’s post asks, are all thefts equal?  I’ve listed four common forms of theft in restaurants and bars.  If the amount of theft is equal in each case, is the cost to the restaurateur the same?  If you think each one has the same impact on the restaurant or bar, read on.

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IT NEVER HAD A CHANCE TO BE SOLD

Today’s post covers fraud and theft of stock items before they are sold or used in your establishment.  These types of fraud relate to purchasing, receiving and inventory stock keeping.  Subsequent posts will cover additional types of fraud and theft.  These posts discuss one of the most important issues facing restaurateurs.

Any theft of product for sale can result in significant sales and income tax liabilities.  So significant, in fact, that it could put your restaurant or bar out of business.  My restaurant tax blog, Canadian Restaurant Tax Advisor, has a wealth of information about restaurant tax audits and their dire implications for you.

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Most restaurateurs know that theft is a problem in the hospitality industry, but very few know how much is going on in their own establishments. According to the U.S. National Restaurant Association, approximately 4% of all revenue is lost to in-house theft.  The latest figures from Statistics Canada, NPD Group and the CRFA, indicate that the average profit margin for Canadian restaurants was only 4.4% of operating revenue!  Based on these figures, approximately one-half of your profit is lost to employee theft.

As if that isn’t bad enough, the cost of missing alcohol is only half of the story.  Increasingly, restaurants and bars are learning that they have substantial tax liabilities resulting from stolen alcohol.  I urge you to learn more about this insidious practice, here.  It’s no wonder that 35% of restaurants fail because of employee theft!

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The majority of the cost of most entrées comes from the “protein” component – meat or fish.  Chefs try to maintain a consistent portion size, usually based on weight.  Despite consistent portions, the cost will fluctuate depending on the raw purchase cost and the butchering yield.  Even if you don’t have recipes fully documented and costed for every menu item, as a bare minimum, you should know the portion cost of the protein component of every plate.  Also, you need to track the number of portions in inventory at all times.  This will allow you to identify major cost problems that may be occurring.

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